Biopharmaceutical company Legend BioTech (LEGN) hit a new 54-week high this Tuesday, up 103.4% this year.
LEGN is a multinational biopharmaceutical company primarily engaged in the discovery and development of cell therapies for oncology. The company’s current lead project is an antigen therapy for the treatment of multiple myeloma, a cancer which affects plasma cells.
The biotech market overall is expected to have a compound annual growth rate of 15.83% from 2021 to 2028, according to Grand View Research. Currently, about four out of 10 drugs are biotech-derived.
While investment in biotech can be risky, since companies’ lead projects might fail during clinical trials or be rejected by the FDA and therefore lose value, biotech ETFs help to mitigate this risk — even for investors interested in innovative firms and clinical trials — by providing broad exposure to the market.
LEGN, for example, is held by 13 ETFs, including the Loncar Cancer Immunotherapy ETF (CNCR), the iShares Biotechnology ETF (IBB), and the ALPS Medical Breakthroughs ETF (SBIO).
SBIO is one of the few small-cap funds with exposure to LEGN. SBIO invests in biotech and pharmaceutical companies with a market cap between $200 million and $5 billion and tracks the Poliwogg Medical Breakthrough Index (PMBI).
According to the SBIO fact sheet, PMBI is “tilted to small and mid-cap firms, which is often where the innovation occurs.” Meanwhile, large-cap biotech firms listed on the NASDAQ Biotech Index focus more on marketing and distribution.
LEGN is SBIO’s largest holding, followed by Kodiak Sciences Inc (KOD), which focuses on the development of novel therapies for retinal diseases, and Vir Biotechnology Inc. (VIR), which develops treatments and preventative technologies for infectious diseases.
SBIO has an expense ratio of 0.50% and currently has $206 million in assets under management.
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